When a pending home on the market goes back to an active listing, those searching for a home will wonder why the sale fell through. Was there something wrong with the house?
In this blog post we will explain the top three reasons why a property can go from pending to no longer being under contract – including contingencies not being met or buyer termination due to circumstances beyond their control.
1. The buyer isn’t able to qualify for financing
Home sales can fall through for many reasons, including the buyer being unable to qualify for financing. This can happen for several reasons, including loss of a job or acquiring additional debt. A falling credit score could also be a culprit. Whatever the reason, when a buyer fails to qualify for financing, the sale of the pending home can overturn, putting the house back on the market.
Buyers can help prevent their mortgage loan from being rejected through responsible fiscal management. This includes:
- Saving up enough money to cover all closing costs
- Not financing large purchases, like furniture for the home
- Keeping up with all payments to help prevent credit score drops
2. The home inspection uncovered defects
Home inspections are a critical part of the home buying process. These inspections evaluate the home’s condition and can be done at any time in the purchasing process. A house might lose pending status if the inspection uncovered a defect, and an inspection contingency was in place. A contingency is a clause in the real estate contract that releases a party from the contract’s obligations if a provision is not met. In this case, an inspection contingency.
3. The home was appraised too low
If a home is appraised for a lower price than what the house is selling for, the sale can fall through. This is especially true if the seller does not want to negotiate and bring the home price down. So, the buyer leaves, putting the house back on the active market.
Purchasing a home for more than what it is worth is a flawed idea in that the buyer will be underwater—when the home loan is for more than the home is appraised for—and lenders will not legally issue a loan.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.